Coinbase. Bermuda Maneuver and the U.S. Market
Coinbase announced on April 19, 2023, in a potentially strategic move, that they have been granted a Class F license from the Bermuda Monetary Authority (BMA). Just a day prior, Brian Armstrong, the CEO of Coinbase, hinted at the possibility of the crypto exchange exploring other jurisdictions due to increasing regulatory pressures in the United States.
Obtaining a license under the Digital Asset Business Act by the BMA allows Coinbase to expand its offering to Bermuda-based customers, including the trade of perpetual swaps, which are currently prohibited in the U.S. The choice of Bermuda, an offshore zone known for its supportive digital asset regulations and attractive tax and regulatory climate, signals a strategic response to the company's regulatory scrutiny in the U.S.
This development follows Armstrong's public expression of concerns about growing regulatory pressure in the U.S. He went so far as to state the company's readiness to leave the American market due to these pressures. His criticisms of the U.S. financial system are notable, particularly his comments on its moral "wear and tear."
However, a few weeks later, on May 4, 2023, during the presentation of Coinbase's financial report for the first quarter, Armstrong reassured investors of Coinbase's commitment to the U.S. market. Despite receiving a "Wells Notice" from the U.S. Securities and Exchange Commission (SEC) in March and rumors of relocation following the Bermuda license acquisition, Armstrong clarified that the company is "100% committed to the U.S. market."
He noted, "I founded this company in the U.S. because the rule of law prevails here. This is very important." Armstrong further revealed his advocacy for new legislation to set clear action rules for the crypto industry in the U.S., highlighting bipartisan support in Congress for this cause.
In conclusion, while the Bermuda license presents an exciting opportunity for Coinbase, Armstrong's comments about possibly leaving the U.S. market might be more of a call for regulatory clarity than an actual relocation plan. Despite the pressures, Coinbase continues to focus on the U.S. market, awaiting decisions from the SEC. The crypto exchange's future moves will depend on the evolution of U.S. regulations surrounding cryptocurrencies.